ALFI chairman Denise Voss, who is conducting officer at US fund manager Franklin Templeton Investments, told journalists at ALFI's annual conference that delegation was a "tried and tested model" that has been used for three decades.

"The questioning of the model of 'delegation' has definitely had more of a political origin than an origin of 'it doesn't work', or 'there have been problems with it' – because there have been no problems," she said.

The scrutiny of delegation is part of a discussion around Britain's departure from the European Union, Voss said, as "some European member states" try to gain business and view Brexit as an opportunity.

France is perceived as being the main proponent of more stringent conditions on delegation in Europe, according to Luxembourg fund experts, because its government has been pushing wholesale relocations of financial firms from London since the Brexit vote.

Luxembourg finance minister Pierre Gramegna said earlier on Tuesday he would "defend" the country's fund industry during any "uncertainty" created by Brexit.

The 'delegation' model attracted the attention of the European Securities and Markets Authority (ESMA) in July, which said extra scrutiny should be applied by regulators when activities are delegated to a "third country", which would include the UK once it leaves the EU in 2019.

Jon Griffin, managing director at JP Morgan Asset Management, told the Luxemburger Wort fund managers needed to know when the UK would be considered a 'third country'.

"The key area we are very interested in is the recognition of the UK by the EU as a 'third country' – and how will that happen and who will do that because, like many managers, we delegate to the UK, but we also delegate to the US and Asia," he said.

"One would assume the UK would be recognised as a 'third country'. But what's not clear is when those arrangements get put in place.

"As a management company, we need the certainty to know we don't have this cliff edge –
that we don't get to March 2019 and all of a sudden [wonder whether our] delegation still good or not."